Economist predicts 12%-14% full-year economic decline

YEREVAN, August 26, /ARKA/. Manuk Yerghnyan, head of Economy and Values think-tank and the managing partner of EV Consulting, predicted today a 12-14% full-year economic contraction of the Armenian economy, but declined to make an economic forecast for the next year, saying the country’s GDP may either fall by 2% or rise as much.

In an exclusive interview with ARKA news agency, he said the economic recovery is not likely in the second half of the year. According to him, the slump in some sectors may even deepen and some large companies may face serious difficulties in servicing their loans.

“I do not think we shall see a chain reaction; the level of financial mediation in Armenia is the lowest among other transitional countries,’ he said, adding that the government emergency assistance to some companies is expected to have a positive effect on the economy.

Earlier this month Prime Minister Tigran Sargsyan said the anti-crisis measures taken by the government should result in a slowdown of the decline later this year that would ultimately have made only 12% t annually. The premier said the government also expected the Armenian economy to grow by a modest 1% in 2010.

“I think the period of adaptation to current economic situation –I mean the reduced amount of remittances, foreign investments and exports, will end in 2009 and we shall see a more stable situation in 2010, ‘Yerghnyan said.

According to official figures of Armenian Central Bank, the amount of remittances sent by Armenians working abroad to relatives in Armenia via banks in the first six months of the year slashed by 33.2% year-on-year to $446.7 million.

Armenia’s foreign trade in January-July fell 32.7% year-on-year to 707.9 billion Drams ($2.013. billion). Exports were down by 44.5% to $352 million and imports reduced by almost 30% to $1.661 billion.

In a comment on a 15% economic decline of the Armenian economy predicted by Fitch Ratings, Yergnyan said it is perhaps the worst scenario.

According to the latest official figures, the country’s economy continued to decline in July amid a deepening fallout from the global recession, showing a 18.5% Gross Domestic Product contraction in the seven months of 2009. ($1 – 375,39 драма). -0-